Create a high resolution version of your design. Keep your layers separate.

Create a 72 dpi flattened copy of your design.

Your submission should be no more than 845 pixels wide, 445 pixels tall, and 72 dpi.

Save your file as a png.

Submit up to three slides.
One slide should show your design on a t-shirt template of your choice. The other slides can be closeups, a .png of the artwork, or alternate color schemes. All three of your slides combined should be under 250 KB.

So curious Q... How are we supposed to flatten the image and keep the layers separate?? Or would there be two different files, one with all layers and another of the flattened image?

Well that's why they put it as an official rule, to make sure it's understood, but as an agreement it's not what I would call super fair. Many times artists will get a certain percentage for each sale, which i think is more respectful and better compensation for the artist. Like imagine if the winning design made 10,000 in pure profit, and the artist only got $500 for their illustration. I'd be a little upset. But that's only my opinion as an artist, you don't have to agree or nothin'.